An unwritten rule is that no one goes into journalism for the money. Oh sure, you have your syndicated columnists, such as George Will, who generate seven-figure incomes, but by and large, the members of the Fourth Estate earn relatively modest incomes — compared to, say, those on Wall Street — doing what they love to do.
But despite my two-plus decades in this profession, I seldom cease to be amazed at reading about some of the pay packages bestowed upon America’s titans of industry.
At a time when my annual salary wasn’t equal to the sticker price on a 2003 Chevy Impala, I read that Intel chief Andy Grove was awarded salary and bonuses totaling $98 million. And Sandy Weill, the überchief at Citigroup, has been the beneficiary of annual compensation packages that could rival the gross national product of some Third World nations.
Now, executives receiving exorbitant pay packages isn’t exactly breaking new ground. And for years, rank-and-file shareholders have not only protested the amount, but have also had the temerity to tie pay packages in with actual performance. Too often, those have been mutually exclusive.
But long-suffering stakeholders have found kindred spirits in the persons of Public Company Accounting Oversight Board Chairman William McDonough and Internal Revenue Service Commissioner Mark Everson.
In a recent speech at a securities conference in New York, McDonough urged corporate directors to re-examine compensation levels within their respective companies.
McDonough said that, in “an ideal world, every CEO would go to their board and ask the members to re-examine executive compensation, starting with his or her own pay.”
A little idealistic perhaps, as I’m having a problem believing that someone like Walt Disney Co. chair Michael Eisner would go to his board (or rather, what’s left of his board after last month’s resignations) and say, “OK, folks, what do you think I was worth this year?” The ensuing answer might find Eisner wishing that he were still executive producer of George of the Jungle.
Nevertheless, McDonough sent a not-so-subliminal message to directors that, in the climate of heightened corporate governance, areas such as compensation will be examined a wee bit more closely than in years past.
Meanwhile, across town, the IRS wants to ensure that SEC issuers are adhering to the rules for granting their executives stock options, fringe benefits and similar perks.
In fact, the IRS is currently conducting an audit of 20-plus companies — with the promise of more to come — to discern whether their executive compensation packages are in legal compliance. In instances where there is a judgment call, the IRS said that it would issue the necessary guidance.
The program, which began in the summer and has gradually picked up steam, may also, according to the IRS, eventually lead to audits of executives’ tax returns — or, as one expert recently referred to it, a “stealth audit.”
As has been a common theme in the era of Sarbanes-Oxley, the intensified focus on compensation has given rise to consulting work in this area. Most professionals have advised their clients to perform internal checklists and even internal audits.
But given the tone of the nation’s top accounting cop and the actions of the IRS commissioner, even a modestly compensated journalist could tell you that if you don’t have adequate internal control, there are government entities willing to take control.
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